The German clash with the EU

In 2015 the German Constitutional Court received a request from a group of 1750 german citizens, raising some doubts about the public debt purchase program undertaken by the ECB near its member states, claiming this to violate article 123 of the Treaty on the Functioning of the European Union. The article states that the ECB does not have the power to directly finance its member states, either through credit concessions or direct purchase of public debt. At the time, the ECB argued the validity of their operations given the legal support from the European Court of Justice.

On the 5th of May of the present year, the German Constitutional Court analyzed once more the 2018 response from the Court of Justice of the European Union in relation to the doubts raised in 2015 by a group of German citizens, and demanded that the ECB deliver, within a 3 months deadline, an analysis of the proportionality of its monetary policies. That is, the German Court does not question whether the monetary policy undertaken by the ECB violates article 123 of the TFUE, it rather wants to infer whether the public debt buy program complies with the principle of proportionality to which the ECB is obliged to stick. The German judges consider that the monetary policies led by the ECB are followed with disregard towards the consequences that those policies may have, and that this approach constitutes a violation of the principle of proportionality. Until the report is delivered, the German Constitutional Court has used its power to prohibit the Bundesbank (the German central bank) from buying any more foreign debt and it has even allowed the Bundesbank to sell the securities it is holding, if it wishes to do so.

Germany being the strongest economy of the European Union, the decision taken by the German Constitutional Court represents a serious drawback in the monetary goals established by the ECB. The decision gets even more preoccupying given that currently all Europe is combining efforts in trying to tackle the major economic crisis striking European economies.

While the German Constitutional Court claims to have power over national institutions, the CJUE already condemned the Court`s decision claiming this to seriously affect the European monetary policy strategy and the latter not to have the right to jeopardize or to contradict ECB measures that are backed by the CJUE, given that the principle of proportionality was always taken into account. CJUE also claims precedence in matters that involve the European Union and, therefore, does not acknowledge the legitimacy of the decision taken by the German Constitutional Court. Isabel Schnabel, member of the executive committee of the ECB, said that the public debt buy program will continue to happen, “regardless of the decision of the German Constitutional Court, given that CJUE has exclusive jurisdiction over BCE and its actions”. The fact that European legislation is above national legislations was not a part of treaties, it merely came into play in 1964 when the European Court of Justice (ECJ) decided so.

Is this the first time that a member state clashes with EU justice?

This is not the first time there is a clash between national courts and European law. A few countries have sought to mitigate this by enshrining the primacy of EU law in their constitutions. And most national constitutional courts have, at some point, declared that, based on article 6(3) of the Treaty on European Union, EU law takes primacy over national law as long as it doesn’t violate the human rights protected by their national constitutions. Constitutional courts have addressed these conflicts in different ways.

One alternative is to interpret constitutional law more broadly, so as to accommodate European law. For example, in 2011, the Greek Council of State recalibrated its interpretation of article 14(9) of the Greek Constitution. This article had previously been understood to prohibit owners of media corporations from applying for government contracts in other areas. But the Council of State decided that, according to the European principle of proportionality, this interpretation was doing more than what was necessary to ensure the objective of the law: transparency in public contracts.

The second alternative national judges have is to interpret European law in accordance with their national constitutional law, assuming the former cannot contradict the latter. This is based on the idea that the national constitution protects certain rights and freedoms that cannot be violated by any law, local, national or European. Few cases like this have appeared so far, but several national supreme courts, namely in Germany, Italy and Spain, have asserted that they have the power to review European law in this way and check if it complies with their constitutions.

A third possible alternative is for national judges to convince the Court of Justice of the European Union to change its interpretation of European law, so that the new interpretation is compatible with their national constitution. For example, in Taricco I, the CJEU held that the statutes of limitations in the Italian penal code violated European law, because they harmed EU financial interests (1). The Italian Constitutional Court then asked the CJEU for an opinion, arguing that complying with their decision would force the Italian penal code to contradict the Italian constitution. The CJEU granted their point and clarified their decision in Taricco I in a more relaxed way.

The fourth alternative national judges have is disobedience, or non-compliance with European law as the CJEU interprets it. This is, of course, an option of last resort. It occurred, for example, when the CJEU declared that a Social Security rule in the Czech Republic that gave an old age benefit only to Czech nationals in Czech territory violated the rights of EU nationals from other member states living there. The Czech Constitutional Court decided it would not apply the CJEU decision and would allow the rule to remain unchanged. The arguments were that the CJEU had exceeded its powers and that the CJEU had failed to take into account the historical fact that that rule was related with the dissolution of Czechoslovakia.

While in many cases national and European justice reach a consensus, it is unavoidable that other cases, like the German Constitutional Court one, will continue to happen. Some consider that these persistent challenges towards European Law from national courts undermine the strength and credibility of the European institutions. Others say that the preference from European Law over National one was a severe and non-democratic imposition over its member states. Nonetheless, this is an important question that urges to be answered in order to better define the future of the European Union: What are the limits, if any, that Europe wants to impose over National Courts in their interference on European policies?

(1) The European Union is partly financed by a share of member states’ VAT. The statutes of limitations for fiscal fraud in the Italian penal code, in the CJEU’s opinion, did not give people enough incentives to not commit fiscal fraud, and therefore harmed the EU’s financial interests.

Afonso Silveira Botelho Manuel Barbosa